ECONOMIC TRANSPORT ORGANIZATION versus M/S. CHARAN SPINNING MILLS (P) LTD. AND ANR

Citation: [2010] 2 S.C.R. 887 · Decided: 17-02-2010 · Supreme Court of India · Bench: K.G. BALAKRISHNAN · Disposal: Dismissed

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Judgment (excerpt)

[201 O] 2 S.C.R. 887 
ECONOMIC TRANSPORT ORGANIZATION 
v. 
M/S. CHARAN SPINNING MILLS (P) LTD. AND ANR 
(Civil Appeal No. 5611 of 1999) 
FEBRUARY 17, 2010 
[K.G. BALAKRISHNAN, CJI., R.V. RAVEENDRAN, D.K. 
JAIN, P. SATHASIVAM AND J.M. PANCHAL, JJ.] 
Consumer Protection Act, 1986: 
A 
B 
c 
ss. 2(1 )(g) and 14(1 )(d) - Deficiency in service ,-
Complaint - Maintainability of - Contract of insurance -
Consignment of goods - Damaged in transit - Compensation 
paid by insurer to consignor/assured - Execution of letter of 
subrogation-cum-special power of attorney by consignor in 
D 
favour of insurer - Claim of compensation by consignor and 
insurer against carrier - Allowed by fora below - On appeal, 
held: Insurer, as subrogee, can file a complaint under the Act 
either in the name of assured (as his attorney holder) or in 
joint names of assured and insurer for recovery of amount 
due from the service provider - It can request the assured to 
E 
sue the wrong doer - Insurer cannot in its own name maintain 
a complaint, even if its right is traced to the terms of a Letter 
of Subrogation-cum-Assignment - On addition of words of 
assignment to Jetter of subrogation, the complaint would be 
maintainable so long as it is in the name of assured and 
F 
insurer figures in the complaint only as attorney holder or 
subrogee of assured -
Document whether subrogation 
simpliciter or subrogation-cum-assignment is not relevant for 
deciding the maintainability of a complaint - On facts, 
presumption regarding negligence u/s. 9 was not rebutted -
G 
Loss of eonsignment by assured and settlement of claim by 
insurer established by evidence - Thus, order of fora below 
not interfered with - Carriers Act, 1865 - s. 9. 
887 
H 
888 
SUPREME COURT REPORTS 
[201 O] 2 S.C.R. 
A 
Insurance - Difference between 'subrogation' and 
'assignment' - Held: Equitable assignment of rights and 
remedies of assured in favour of insurer, implied in a contract 
of indemnity, is known as 'subrogation' -
It occurs 
automatically, when insurer settles the claim under the policy, 
B by reimbursing the entire loss suffered by assured - It need 
not be evidenced by any writing - Assignment refers to transfer 
of a right by instrument for consideration - When there is 
absolute assignment, assignor is left with no title or interest 
in the property or right, which is the subject matter of 
c assignment. 
Subrogation - Principles of - Explained. 
Subrogation -
Three categories - Subrogation by 
equitable assignment; subrogation by contract; and 
D subrogation-cum-assignment - Explained. 
Insurance contract - Settlement of claim - Execution of 
document by assured in favour of insurer, deed of 
Subrogation simpliciter or Subrogation-cum-Assignment -
E Held: Depends upon the intention of parties as evidenced by 
the wording of document - Title or caption of document, by 
itself, may not be conclusive - If intention was to have only a 
subrogation, use of words "assign, transfer and abandon in 
favour of' would in the context be construed as referring to 
F 
subrogation only. 
Reconsideration of the decision in *Oberai Forwarding 
Agency v. New India Assurance Co. Ltd. - Held: Oberai's 
case is not good law insofar as it construes a Letter of 
Subrogation-cum-Assignment, as a pure and simple 
G assignment - But to the extent it holds that an insurer alone 
cannot file a complaint under the Act, the decision was correct. 
s. 2(d) ( as amended by Amendment Act 62 of 2002) -
Addition of words 'but does not include a person who avails 
H of such services for any commercial purpose' in the definition 
ECONOMIC TRANSPORT ORGANIZATION v. CHARAN 
889 
SPINNING MILLS (P) LTD. 
of 'consumer' - Applicability of amendment to complaint filed A 
before the amendment - Held: Not applicable. 
Transfer of Property Act, 1882: 
s. 6 -
Letter of subrogation containing terms of 
assignment - Held: Cannot be treated only as an assignment B 
by ignoring the subrogation, otherwise document itself 
becomes invalid and unenforceable, having regard to the bar 
contained in s. 6 - But when letter of subrogation-cum-
assignment is executed, assignment is interlinked with 
subrogation, and not being an assignment of a mere right to C 
sue, will be valid and enforceable. 
Words and Phrases: 
'Subrogation and 'Assignment'- Meaning of. 
The first respondent-assured/consignor entrusted 
consignment of goods for transportation to the appellant-
D 
ca rrier. The said consignment was insured with the

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